Artisan Mid Cap Fund on RBC Bearings Incorporated
Thesis
RBC Bearings supplies differentiated bearings, gearing and motion-control products, with over 70% of revenue from sole- or primary-sourced parts. Commercial aerospace growth accelerated to 20%, demand across industrial markets was broad and management raised the margin outlook. Defense growth could accelerate again as production constraints ease. The fund added after a sector-driven stock decline, expecting a multi-year runway across aerospace, defense and industrial markets.
“We believe RBC has a multi-year growth runway across aerospace, defense and industrial markets”
Key risks
- Capacity constraints could continue to limit defense-related growth.
- Broader aerospace and defense weakness can pressure the share price despite strong operating results.
- Management’s stronger margin outlook still requires successful execution.